The Showrooming Threat: 5 Ways to Fight Back
While some retailers are exploring iBeacon and other in-store digital goodness, most physical retailers are concerned about the threat of showrooming -- when customers visit the physical store with the intent to order online (which increasingly involves a mobile touch).
The threat of showrooming
Consumers showroom in hopes of finding a lower price online, and of course, when it comes to low prices, the road often leads to Amazon.
92% of consumers who showroom have used Amazon to compare prices, compared to 84% who’ve used Google, and 77% that use price comparison sites. Amazon’s making it easier and easier to showroom. Since 2010 its mobile app has supported barcode scanning, and today uses image recognition to make finding a physical product in its catalog even faster.
Considering 50% of male and 42% of female consumers who showroom are members of Amazon Prime, the value prop of “spend a little more here because you don’t want to wait for shipping” isn’t enough.
No retail store wants to keep the lights on to make shopping on Amazon an even more delightful experience. And it’s not just consumer electronics retailers that have to fear. Forrester Research found sporting goods, specialty apparel, luxury department stores and child-and-baby categories were even more likely to be showroomed, with booksellers, department stores, gifts and office supplies on par with consumer electronics.
But it’s not all doom-and-gloom, Forrester reports 49% of customers that price check in-store report they ultimately do purchase in-store or from the store’s website, while 41% purchase from a competitor.
You can be on both sides of this phenomenon. Your own store visitors may buy from you, or you may benefit from other stores’ showroomers. How can you ensure you save (and steal) showrooming sales?
Price match is not the answer
Considering 67% of showroomers will buy from a physical store over Amazon when the store matches Amazon’s price with a rebate, price matching programs like Best Buy’s are a great idea, right?
Best Buy declared it’s killed showrooming for good with its price-match policy. (Best Buy is one of the top 3 retailers that Amazon’s male customers use to showroom). Unfortunately, any retail store trying to compete with Amazon on price is looking at taking a loss that, if successful, actually costs the business.
Here’s a secret - Amazon can afford to sell below cost because its quicker-than-retail inventory turnover generates cash well before its credit period is up. Amazon makes money investing customer cash while other retailers pay interest on money they need to borrow to pay suppliers.
Credit: Jared Spool
Keep in mind, price matching can get convoluted - is the item a refurb? Is it being sold second-hand through the Amazon Marketplace that’s not actually stocked and sold by Amazon? Is it an older model? Denying price matches for any of these reasons may tick off customers and ultimately hurt your brand. Customers are not always as understanding of these nuances, to them a product and a price are what they are.
If not price matching, then what?
Support in-store and online purchases from your store
A certain percentage of showroomers intend to buy from your business. They’re looking for product information like customer reviews and leveraging your site to find products you don’t have on the shelf, or prefer to have shipped to their homes. Support this behavior with a mobile-friendly website or app, barcode scanning or iBeacon content, wayfinding tools, self-serve features (photo input, easy text search) and "endless aisle" capabilities (ability to locate the item online or in another store, reserve and collect self-serve, etc).
Advanced marketers and data scientists may someday be able to predict when a customer is showrooming through cross-touchpoint behavior, dwell-time in front of a product in-store or other factors. It may be possible to deliver targeted content, messages and offers or deploy helpful floor staff to assist or "save the sale."
Price match yourself
73% of consumers expect a retailer’s online pricing to be the same in-store, and 61% expect online promotions to be the same in-store -- yet only 16% of top global retailers have price parity, and 73% offer the same promotions.
Despite what customers want, not all retailers can be consistent all the time. But customers don’t care about the ‘why,’ they care about the ‘what’ if you won’t honor online prices in-store.
A policy to match your own online prices when requested in-store is even more important when you run separate P&L. PO’ing a retail customer by enforcing a higher price in-store may just drive that customer to always use the online channel (or showroom other local shops), and only use your retail location to showroom your own brand.
While it still may not be possible to always have the same prices between local stores and your website, a policy of honoring price match requests when you get them is important.
Consumers can be predictably irrational when it comes to loyalty programs. The dangled carrot of reaching a points threshold that pays out in dollar discounts or other perks can be a powerful motivator. If your loyalty rewards are killer, there’s an opportunity cost of buying elsewhere -- even at a lower price.
LPO is an acronym for “landing page optimization,” but marketers should also be engaging in another LPO: “loyalty program optimization.” Survey customers and test loyalty offers and rewards, and explore ways to personalize offers. This could be the best defense against both showrooming and your online competition.
Testing should also be conducted on the profitability, not just the popularity, of program incentives.
Offering digital access to loyalty accounts helps assists your faithful customers. If your site isn’t mobile optimized, or it’s a difficult process to sign-in, this slows down convenience-driven showroomers. Consider making points balances prominent upon account or mobile app sign-in, and leverage push notifications or iBeacon messages that remind customers of their point balance when they enter the store.
Price match the competition
Price match the competition so long as you can do so profitably. Dynamic price matching software can be applied to your online or offline channels, and when configured with the right rules can prevent under-pricing while ensuring that self-serve price-checkers can see you price fairly without having to find a store associate and go through your price match process.
Dynamic pricing can also raise your prices when it’s justified to do so. Considering Amazon changes prices every 10 minutes on average, dynamic price solutions help you stay on top of the volatility. Amazon, Walmart and Best Buy all leverage dynamic pricing.
Keep in mind, dynamic pricing may cause problems with customers who spot price changes after they’ve purchased. Consider the impact on customer service resources, branding and loyalty.
Poach from the competition
If 41% of customers who showroom end up buying elsewhere, you may also enjoy the positive end of showrooming behavior. A few ideas on how:
- Use dynamic pricing to stay competitive (when profitable, vs. an always-match pricing policy)
- Boost your visibility with showroomers by sharing your local inventory and pricing info via Google’s Local Inventory ads program
- Participate in comparison shopping engines and coupon aggregators (customers use these apps in store)
- Consider prompting customers with mobile push alerts (such as time-limited coupons) when they’re near your competitors’ stores
Webrooming happens too
We can’t forget webrooming - when customers “use” your online presence to research purchases they intend to buy in a physical store - from you or a competitor (aka Research Online, Purchase Offline).
In fact, slightly more 78% of US shoppers report webrooming (buying in-store after browsing digitally) vs 72% that showroomed.
When customers prefer to buy offline, it’s typically because they want to save on shipping costs, get it right away, or see or try the product in person. There’s always a chance that the item isn’t in stock locally, and you have another chance...remarketing advertising is one tactic to keep your brand in mind.
If you offer ship-to-store or reserve-and-collect, over-communicating this service is key. Not every customer is aware of all your service policies, and the assurance that a product is in-stock and a trip to the mall won’t be wasted can help convert a ROPO (research online purchase offline) visitor to a customer. It also helps you properly attribute web “assists” to sales.
Showrooming and webrooming are a fact of modern retailing
Technology is making it easier and easier for consumers to showroom and webroom, and this behavior is here to stay. To be competitive, retailers must also embrace technology -- from mobile sites and apps that support in-store research and "endless aisle" to optimizing loyalty programs, from dynamic pricing to price matching across channels. Understand where your "leaks" are, and where to best plug them, and anticipate opportunities to capture your competitors' showroomers.